Local, state, and federal taxes
Taxes are applied at all levels of government (local, state, and federal). The level of government originating the taxes is an important consideration. For example, as your state senator, I do not specifically control the “city” or “county” taxes within your communities except for authorities the state may grant local governments for taxation. Local taxes are decided by your city councils, county officials, or by community vote. I also have no impact on “federal” taxes determined by the United States Congress. Those taxes are decided by federal lawmakers. As a state legislator, I am involved in the “state” level taxes. The primary taxes in Washington state include sales and business taxes, although a portion of the sales tax is decided by local governments.
What taxes does our "state" collect?
This chart shows the tax revenues expected for state budgeting purposes. (Local and federal taxes are not shown in this chart). While most of your property taxes are local taxes, a portion of your property taxes is a “state school levy,” which contributes to state revenue. The other school taxes are local school taxes.
Understanding the property tax system
Of all the taxes collected among all levels of government, the one I receive the most questions and complaints about is the property tax. Understanding the property tax system can be quite challenging. Fortunately, for this email newsletter, I was able to consult with county assessors whose websites provide excellent resources for a more in-depth understanding of property taxes. It is important to note that assessors determine the value of the property in a county. The county treasurers collect property tax revenues. Neither the assessors nor the treasurers determine the taxes approved. Those decisions are the responsibility of other local governments officials or the voters in a particular jurisdiction.
Property taxes vary depending on where you live
The property tax bill that you receive is actually a collection of multiple different property taxes and assessments, most of which pertain to the local jurisdiction in which you live. The property tax statement includes an itemized list showing the responsible entity for the property taxes you pay. One way that I like to explain things is to think of your overall property tax bill as one round-shaped pie. Various entities receive their revenue from slices of the pie. Since the state relies primarily on sales and business taxes to fund its programs, only a slice of what you pay in property taxes is actually the state portion.
Remaining slices (some larger than others) are comprised of taxes from various local governments for such things as school levies, school bonds, fire response, library, and other local services. Some of these property taxes, such as local school district levies and bonds or fire district taxes, are subject to the approval of local voters and the amounts are often increased. Residents of one jurisdiction can pay more or less property taxes than residents of another jurisdiction depending on the measures approved by voters in that area. For example, if you live in a county’s unincorporated area, you will not pay the city property tax because you live outside of the city’s boundary. However, you likely still pay the school district’s taxes because while your home resides outside of city limits, it is likely within the school district’s boundaries.
This graph shows property taxes in Snohomish County. The state portion of the property tax is approximately 29.22 percent. The remaining amounts are each locally determined, either by elected officials or community votes.
Payment of property taxes
How you pay your property taxes may also vary based on your personal preferences. Some residents pay their annual property taxes twice a year with half payments by April 30 and October 31. Others can pay the full year’s tax by April 30, if they can afford it and do not want to risk forgetting to pay the second portion. Many property owners have their property taxes included with their monthly mortgage payments as part of their escrow account. While that is certainly a convenient option, it may somewhat disguise what you are paying in property taxes. For many residents living in paid off homes, property taxes are no longer included with monthly mortgage payments bills, requiring a separate payment for property taxes. When the property tax payments are separate, they are certainly more noticeable. Current law provides a variety of authorized reductions, exemptions, deferrals, and other assistance to property taxpayers. Creating more reductions and exemptions can cause complications, however, because as more properties are exempted from paying, the overall tax burden is applied to the remaining taxable properties. This results in a “tax shift” with all of the other properties paying more.
Assessed value and community valuation
The assessed value of property in addition to the tax rates is a contributor to what property owners pay. If a tax rate remains the same but a property’s value increases, a property owner likely pays more. When the total value of assets throughout a particular jurisdiction increases, often due to enhanced residential and commercial development, the tax-requesting governmental entity enjoys the benefit of that total dollar amount it is seeking in taxes being spread over more paying and valued properties, helping to keep the tax manageable. Generally speaking, new businesses or additional home development in a community help increase the overall valuation of an area’s property, which spreads around any fixed tax burden to more taxpayers.
This graph shows the property tax distribution in King County. The state portion of the property tax in King County is 28 percent. Each county’s distribution is different based on the taxes collected in that particular county. For more information about your property taxes, please contact your county assessor.
Links to more information
Most property taxes are determined locally
The Washington state operating budget relies primarily on sales tax and business tax for its revenues. Only a portion of your property tax is collected for state government purposes. The property tax is primarily a local tax function with some property taxes approved by your various local elected officials and some that are subject to a local vote. The local school levies, school bonds for buildings, fire district levies, port district taxes, and library district taxes as well as city and county taxes and others – along with the value of your property and the surrounding property in your area – all affect what you pay in property taxes.
